Auctions & Tenders
Simon H Jones (Director/Auctioneer)
Ann Evans Jones BSc (Hons) MRICS (Chartered Surveyor)
Selling at Auction
This can be the ideal way of ensuring that you gain the best possible price and of avoiding any last minute hitches, with property auctions becoming more and more popular, the increase in demand for auction properties can often lead to the price being driven up.
You also have the benefit of knowing that once that hammer falls, the contract is legal and binding. The purchaser has to pay a 10% deposit on the day, and come up with the balance within 28 days. This avoids the uncertainty that is usually associated with selling a property in the conventional manner, and the chance of gazumping, or of the buyer pulling out, becomes negligible.
Why should you sell at auction?
Prior to putting your property up for auction, it's worth asking yourself a few questions, as some types of property tend to be more suitable for the process than others. For example, if you have a property that is particularly run down, or in need of improvement it is well known that auctions tend to attract purchasers who are specifically after a renovation project.
It could be that you have a property which is unique and difficult for a conventional estate agent to put a definitive price on. In these circumstances an auction will determine the market price for you, as bidders will pay the price they feel it is worth to them, also, if a property has proven difficult to sell for whatever reason, perhaps because of legal complications with covenants for example, an auction will hopefully end with a definite sale with no chance of it falling through.
Another reason could be that you simply need a quick and uncomplicated sale, perhaps if you are moving abroad for instance.
If you do decide to sell your property at auction, then you will need to decide on an auctioneer. There are quite a few of these around, some who specialize in auctions, and others who are regular estate agents with an auctioneering division. Like when you're selling by conventional methods, it's best to shop around to find the auctioneer that you feel most comfortable with.
Prior to auction you will need to instruct a solicitor to prepare contracts and the legal pack, and set out any special conditions that might be pertinent to the sale.
Agreeing the 'guide price’ and reserve price
The auctioneer/agent also has to decide what the guide price of the property should be. This isn't necessarily the same as the reserve price, and once again careful thought will have to go into the decision. The trick is to keep it low enough to entice buyers to attend the auction with the intention of bidding for the property, but for it not to be unrealistically low so that bidders are put off as the price is driven up much higher during bidding.
Before the property reaches the auction, a week or so before you will need to decide with your auctioneer what your reserve price is going to be.
This is the minimum price that you will accept once the bidding starts, by this time the agent will have been able to gauge the interest level based on the response to the marketing campaign, (i.e. whether any surveys have been carried out on the property, request level for the legal pack)
If a property is to sell at auction it is very important to set the reserve at the right level because once it is reached, there is no going back: the property will be sold.
Preparing the property for auction
After the catalogue has been produced and the particulars of the property are ready for all to see, it is usual for the agent to accompany the buyers around the property on viewings Needless to say, as always when selling a property, it pays to ensure at this stage that it is looking as good as it possibly can in order to entice potential purchasers into making a bid.
Getting offers before the auction
It is sometimes the case that an offer is made prior to auction. This is perfectly legal, and it is up to the vendor to decide whether it is worth taking it, or risk the uncertainty of the auction.
We know that this is potentially risky, as bidding might stop before the offer price was reached, but I would already know the amount they were willing to pay, and would therefore be inclined to hold out for that.
When your property finally does go to auction, you will find that it usually takes place at our premises in Llangefni or a large function room. You are under no obligation to attend, as it is usual for your solicitor to be present to act on your behalf.
However, if your property fails to meet its reserve, it does not necessarily mean that it's, all over. If you need to sell the property, and are willing to sell at a price that is lower than the reserve, then it is still possible to negotiate and do a deal with a buyer when the auction has finished. If the property fails to meet its reserve, the auction terms and conditions still remain, and as long as a price is agreed, and the buyers are willing to sign, then a deal can go ahead.
Is selling at auction right for you?
All in all, if you're in a situation where you would rather not have the uncertainty when selling your property, and want a quick and legally binding sale, then selling a property at auction is a great idea.
However, as you are aware we are in difficult market times and auction buyers are looking for a bargain, if a sale is to be achieved prices have to be realistic.
Contact our Llangefni Office to discuss your options further on 01248 723303.